Q FM Africa's Modern Radio
The Centre for Trade Policy and Development (CTPD) has called on government to implement debt management strategies in order to avoid complete depletion of foreign reserves and to serve the integrity of the Kwacha.
CTPD Researcher Bright Chizonde says the current reserves of about US$1.4 billion, half the recommended amount only support 1.6 months of import cover, which is not sustainable for an import based economy like Zambia.
Mr Chizonde says it is clear that the debt position of the country is high for its capacity and will need restructuring if the country is to be brought back on a path of recovery.
He states that amidst the planned austerity which he says the country must indeed undergo; government needs to observe discipline and restrain itself from borrowing further at high interest rates as this will constrain prudent debt management while worsening the economic situation.
Mr Chizonde says government needs to look at the composition of all its debt to determine which ones need restructuring and only turn to refinancing as a last resort mostly on commercial loans I has taken.
He notes the need to renegotiate the Chinese loans and that government must be transparent enough in order to win the confidence of the international community including the IMF.
Mr Chizonde has further called on government to positively engage the IMF to strike a deal which he says is imperative in the short and medium term to address liquidity challenges and help maintain a decent value of the domestic currency against foreign currencies.